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The Role of Prices on Excludable Public Goods

Sören Blomquist and Vidar Christiansen

No 536, CESifo Working Paper Series from CESifo Group Munich

Abstract: When a poublic good ist excludable it is possible to charge individuals for using the good. We study the role of prices on excludable public goods using an extension of the Stiglitz-Stern version of the Mirrlees optimal income tax model. Our discussion includes both the case where the public good is a final consumer good and the case where it is an intermediate good. We demonstrate that for a public consumer good charging a positive price may be desirable, but only under certain conditions. However, charging a lower than optimal price may be less efficient than setting a zero price. Conditions are identified under which consumers should be rationed in their demand rather than adjusting demand to price. We also conclude that producers using an intermediate public good as input should not be charged a positive price.

Keywords: excludable public goods; public sector pricing; information constrained Pareto efficiency (search for similar items in EconPapers)
Date: 2001
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Related works:
Journal Article: The Role of Prices for Excludable Public Goods (2005) Downloads
Working Paper: The Role of Prices on Excludable Public Goods (2001)
Working Paper: The Role of Prices on Excludable Public Goods (2001) Downloads
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